Correlation Between Arrow Electronics and PACIFIC

Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and PACIFIC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Arrow Electronics and PACIFIC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arrow Electronics and PACIFIC GAS ELECTRIC, you can compare the effects of market volatilities on Arrow Electronics and PACIFIC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Arrow Electronics with a short position of PACIFIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and PACIFIC.

Diversification Opportunities for Arrow Electronics and PACIFIC

-0.23

Correlation Coefficient

Arrow Electronics  PACIFIC

Very good diversification

The 3 months correlation between Arrow and PACIFIC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and PACIFIC GAS ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS ELECTRIC and Arrow Electronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Arrow Electronics are associated (or correlated) with PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS ELECTRIC has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and PACIFIC go up and down completely randomly.

Pair Corralation between Arrow Electronics and PACIFIC

Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the PACIFIC. In addition to that, Arrow Electronics is 3.46 times more volatile than PACIFIC GAS ELECTRIC. It trades about -0.21 of its total potential returns per unit of risk. PACIFIC GAS ELECTRIC is currently generating about -0.01 per unit of volatility. If you would invest  9,831  in PACIFIC GAS ELECTRIC on October 6, 2024 and sell it today you would lose (9.00) from holding PACIFIC GAS ELECTRIC or give up 0.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Arrow Electronics  vs.  PACIFIC GAS ELECTRIC

Arrow Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

PACIFIC GAS ELECTRIC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS ELECTRIC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arrow Electronics and PACIFIC

The main advantage of trading using opposite Arrow Electronics and PACIFIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, PACIFIC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PACIFIC will offset losses from the drop in PACIFIC's long position.

The idea behind Arrow Electronics and PACIFIC GAS ELECTRIC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.